[OPE-L] Six book plan, foreign trade

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Tue Sep 26 2006 - 14:00:17 EDT

Hi Rakesh,

A few points...

You argue:

"Since Marx never accepted the assumptions on which Ricardian theory
of ca is based, it's not clear to me that he had to develop an
explicit critique of it in order to demonstrate the possible multiple
effects of foreign trade on the expanded reproduction of capital."

Well, I guess we differ a bit there - I take Marx to be doing what he said
he was doing, namely making a critique of political economy (such as was
known in his time). Ricardo was undoubtedly the intellectual giant in
economic thinking at the time, and Marx was evidently interested in the
topic of foreign trade as well, for example, he copied estimates on British
imports and exports from "The Economist" magazine. He just did not write a
lot about it, except for currency exchange, but that was because as I
argued, his project was unfinished and incomplete.

The main point though that Marx repeats several times (in the Grundrisse and
Capital) is that - whereas obviously people would not normally trade unless
they gained something from it - some could gain much more from the trade
then others, so that in aggregate more labour effectively traded for less
labour, i.e. you have to produce more and more, to obtain the same amount of
product in exchange. This modifies the operation of the law of value. In
Marx's day, foreign trade was not quantitatively so significant as it is
today. As I mentioned, e.g. the US economy nowadays  swallows up an amount
of foreign goods and services the value of which is nearly equal to Italy's
GDP each year (of course, I need a bit more statistical rigour here since
multinationals are in the habit of re-exporting as well, for which the
figures have to be adjusted).

One of the points Prof. Anwar Shaikh makes is that effectively the
comparative advantage/cost theorists operate with two theories of trade, one
applying to the domestic market and another one applying to international
markets - but why should there be one set of economic laws for the domestic
market and another set for international trade? Presumably Marx would argue
that capitalist behaviour internationally would follow the same kinds of
principles that operate nationally. (Shaikh's papers on international trade
are available here: http://homepage.newschool.edu/~AShaikh/).

You asked:

One more question: did Mandel ever speak to the relationship between
the six book plan and the four volumes that Marx did write?
Yours, Rakesh

As far as I know, he did comment on it (e.g. in his Introductions to
Capital) but he mainly followed Rosdolsky's interpretation.

Mandel's theory of the world market (in Late Capitalism) contains some
important insights, but as Klaus Busch among others points out, there are
also problems with it. Mandel's theory of unequal exchange isn't very good
yet. But it is better than those scholars who argue Marx upheld a Ricardian
theory of foreign trade (rather odd especially since Marx wrote relatively
little about foreign trade).

Makoto Itoh also provides a careful discussion of the topic in his "The
Basic Theory of Capitalism", p. 55 ff. Itoh rejects Grossmann's
interpretation and is also critical of Rosdolsky (being an Unoist). Among
other things, when Grossmann discussed this issue in 1929, Grossman did not
have access to the Grundrisse and all the related economic manuscripts and
letters by Marx.

On 15 August 1863, Marx wrote to Engels:

"In one respect, my work (preparing the manuscript for the press) is going
well. In the final elaboration the stuff is, I think, assuming a tolerably
popular form, aside from a few unavoidable M-C's and C-M's. On the other
hand, despite the fact that I write all day long, it's not getting on as
fast as my own impatience, long subjected to a trial of patience, might
demand. At all events, it will be 100 p. c. more comprehensible than No. 1.
When, by the by, I consider my handiwork and realise how I've had to
demolish everything and even build up the historical section out of what was
in part quite unknown material, I can't help finding Izzy a bit of a joke;
for he has already got 'his' political economy in hand and yet everything he
has peddled around hitherto has shown him to be a callow schoolboy who
trumpets abroad as his very latest discovery, with the most repulsive and
impertinent garrulity, theses that we were doling out 20 years ago as small
change to our partisans, and ten times better at that."

What does Marx mean by the "demolition" here? It is not clear. It could
refer (1) to abandoning his original plan, (2) to reworking the manuscripts
he previously wrote, or (3) to overturning every theoretical matter in the
classical literature.

As I think K. Tribe noted (Economy & Society, May 1974), Grossman's idea
might have been that the purpose of the reproduction schemes is to show that
the capitalist economy can in principle be self-reliant, without depending
on foreign trade or the world market. But as I already quoted, Marx states
explicitly "Capitalist production does not exist at all without foreign
commerce." http://www.marxists.org/archive/marx/works/1885-c2/ch20_04.htm#12
It is not really that Marx is trying to prove the self-reliance of a
national capitalist economy (anymore than he is trying to prove an
Arrow-Debreu equilibrium theorem), rather he is showing that his theory of
surplus value and accumulation can be sustained when considering the
reproduction of the total social capital, in abstraction from the effects of
foreign trade. This is a model of the "pure case" if you like. Moreover, the
analysis yields important conclusions about how the annual gross product
should really be defined and valued, conclusions which also appear in the
"Resultate" manuscript. The problem with Grossmann's analysis is "at what
level does the logic of reproduction that culminates in crises apply?" At
the national level? Or at the world level?

As I've mentioned already, there exists a considerable body of Marxian
theoretical work on the world market, from semi-Marxists like Varga and
Kondratieff onwards, though much of it not in English unfortunately. It
would be good to translate Christian Girschner's book, but I haven't time or
energy for it now.

Once we are not so concerned anymore with doctrinal orthodoxy, we can
develop Marx's analysis in new directions. How would Marx have tackled
foreign trade? Presumably he would have started off with a survey and
critical sifting of what the political economists had said about it, in the
context of their times, and then develop a more adequate theory, along the
lines that "foreign policy is an extension of domestic policy". Luxemburg
actually takes such an approach to an extent, but she tries to make the
reproduction schemes do more work than they warrant.

One of the reasons why cogent economic argument gave way to a lot of hot-air
theoretical hullaballoo about "globalisation" in the 1990s is precisely
because a good critical examination of facts and theories about foreign
trade and the world market was lacking. I think you have to understand the
economic basis of imperialist aggression, without however reducing it
totally to that economic basis.

AG Frank wrote long ago:

"Between 1600 and 1750, Portugal itself underdeveloped and was not able to
expropriate so much of its Brazilian satellite. Portugal was ever more
converted into a satellite. The treaties of the seventeenth century, and
especially the Treaty of Methuen in 1703, brought on the destruction of
Portugal's textile industries, the take-over by Great Britain of its foreign
and even domestic trade, and the conversion of Portugal into a mere entrepot
between Great Britain and Brazil and other Portugese colonies. Portugal did
become an exporter of wine, in exchange for the textiles it could no longer
produce because of the flooding of its market by British products - which
David Ricardo in 1817 had the temerity to interpret as a law of 'comparative
advantage'. Portugal became a satellite-metropolis which took an ever
part of the economic surplus of its own Brazilian satellite thanks to the
monopoly position it still retained, while Great Britain took over the
economic monopoly and spoils. Illuminating in this connection are the
observations of the Marquis of Pombal, Prime Minister of Portugal and its
second Colbert, who clarified the situation and therewith the roots of
Portugal's underdevelopment in 1755, some years before Adam Smith inquired
into the causes and nature of the wealth of nations, and half a century
before Ricardo assured the world that Portugal's production and exchange of
wine for Britain's textiles was a universal law for the good of all. Pombal
wrote: (...) "These foreigners, after having acquired immense fortunes,
disappeared on a sudden, carrying with them the riches of the country...".

- Andre Gunder Frank, Capitalism and Underdevelopment in Latin America.
Harmondsworth: Penguin edition, 1971, p. 183-184.

For more detail on the historical origins of the doctrine of comparative
advantage, see: S. Sideri, Trade and Power: Informal Colonialism in
Anglo-Portuguese Relations. Rotterdam (Netherlands): Universitaire Pers
Rotterdam, 1970. (it is held at UCLA  SRLF  UCD  UCSB  UCR  UCSD ).


This archive was generated by hypermail 2.1.5 : Sat Sep 30 2006 - 00:00:06 EDT